Home prices continued to grow at a pace three times faster than inflation throughout the end of 2017. Average price growth soared to 6.2% year-over-year across the nation, while some of the hottest housing markets posted double-digit gains.
- Home prices rose 6.2% year-over-year in November, up from 6.1% growth in October
- Seattle and Las Vegas topped the charts with double-digit price growth
- There are not enough single-family home starts to keep up with buyer demand
Home prices are reaching new heights as they continue to rise far beyond the rate of inflation, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Prices NSA Index. The latest index, which covers all nine U.S. census divisions, showed that national prices increased 6.2% year-over-year in November.
“Home prices continue to rise three times faster than the rate of inflation,” said David Blitzer, S&P Dow Jones Indices managing director and chairman of the index committee. “The S&P CoreLogic Case-Shiller National Index year-over-year increases have been 5% or more for 16 months; the 20-City index has climbed at this pace for 28 months.”
Seattle home prices increased the most with 12.7% annual growth. Las Vegas and San Francisco reported the second and third highest growth with 10.6% and 9.1%, respectively.
The Home Price Index’s 10-city composite increased 6.1% year-over-year, and the 20-city composite increased 6.4% year-over-year.
“Looking across the 20 cities covered here, those that enjoyed the fastest price increases before the 2007 to 2009 financial crisis are again among those cities experiencing the largest gains,” Blitzer said. “San Diego, Los Angeles, Miami and Las Vegas, price leaders in the boom before the crisis, are again seeing strong price gains.”
Many experts have been attributing the extreme price growth to factors like low unemployment, high construction costs, and strong buyer demand. David Blitzer, however, points to dramatically fewer single-family home starts.
“From 2010 to the latest month of data, the construction of single-family homes slowed, with single-family home starts averaging 632,000 annually,” he said. “This is less than the annual rate during the 2007 to 2009 financial crisis of 698,000, which is far less than the long-term average of slightly more than one million annually from 1959 to 2000 and 1.5 million during the 2001 to 2006 boom years. Without more supply, home prices may continue to substantially outpace inflation.”